Monday, June 08, 2009

The EU Emissions Trading Scheme: assessment and outlook

After setting this question to my Econ 211 students as part of their assessment I was interested to come across an academic answer to the question. I hope this paper does not "too" closely resemble the answers given by my students for their sakes.

The EU Emissions Trading Scheme: assessment and outlook

S├ębastien E. J. Walker

The Queen's College, University of Oxford

ABSTRACT

In this article I assess the design of the EU Emissions Trading Scheme and the performance of its first Phase. The article argues that, contrary to common belief, Phase I fulfilled its objectives. It then discusses the changes that have been made to the Scheme's framework for Phase II, and those that are planned for Phase III, covering the latest developments and the recent price trends for emissions allowances. I conclude that the aforementioned changes constitute substantial improvements to the Scheme, while unwelcome uncertainties nevertheless remain over long-term price signals.

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